Staying warm without warming the planet

As climate change brings about more extreme temperatures and weather patterns, people will rely more on temperature control systems to stay comfortable and productive. That makes decarbonising them through the use of renewable energy and more efficient technologies all the more urgent.

The heating and cooling sector is lagging behind in the transition away from fossil fuels.

Currently, the sector accounts for about half of global final energy consumption¹ and 15 per cent of global greenhouse gas emissions,² relying heavily on coal, oil and natural gas. That is partly due to variable demand caused by changing daily and seasonal temperatures. The problem is compounded by the fact that individuals and businesses are reluctant to pay a premium for more sustainable heating and cooling systems. Unlike the appeal of a shiny new electric car, there is little social incentive to invest in a new boiler.

“Globally, the uptake of renewable electricity sources has been positive, but the uptake of renewables in the heating and cooling sector has been stagnating, which is concerning because this sector is a gigantic piece of the transition,” says Aurelie Beauvais, managing director of Euroheat & Power, a European association promoting sustainable district heating and cooling solutions.

District heating powered by heat pumps

A combination of two crucial technologies can help decarbonise this sector. District heating systems play a crucial role in temperature control in many countries, including Denmark, Finland, and Sweden.

These systems are built on collective infrastructure, where heat or cold air is generated in a centralised energy source and then distributed to residents and industries in a given area. Collective systems are significantly more energy efficient than individual ones; district energy systems can consume up to 50 per cent less energy for heating and cooling than standard approaches. The biggest efficiency gains come from those that are connected to large scale renewable energy sources, like wind farms.

Another benefit of such systems is recovery of excess heat – taking heat emitted by other processes and reusing it as energy.

“Cooling processes in urban environments, like refrigeration centres, supermarkets, and data centres, are all emitting a lot of heat, which can be harnessed as a heat source,” explains Beauvais. “The beauty of this method is that it makes use of a resource that would otherwise be wasted, which is very effective for circularity.”

Which leads us to the second crucial technology – heat pumps. First developed in the 19th century, they redistribute heat from one location, such as the vents of a data centre, to concentrate it in another, like the radiator in a home. They can also do the process in reverse, to achieve cooling.

“It’s the most abundant efficient heating technology that’s ever been invented,” says Jan Rosenow, Principal and European Programme Director at the Regulatory Assistance Project, a non-governmental organisation aiming to advance policy innovation in the energy sector. “Burning fuel always results in some energy losses, so over 100 per cent efficiency is impossible, but heat pumps move and compress heat that’s already in the air, ground or water, and transport it to wherever it’s needed.”

By removing heat from the environment, heat pumps can produce three times more energy than the power needed to run them, an efficiency of 300 per cent.

Large heat pumps can serve as an energy source for a district heating network; equally, individual ones can be placed in homes or businesses which cannot be connected to communal infrastructure, such as those in rural areas. In Scandinavia, heat pumps are already the standard heating solution for homes not connected to district heating networks, according to Rosenow. 

Changing the consumer climate

Despite such successes, there are still obstacles to the wider adoption of district heating and heat pumps. Municipalities will need to support their uptake with comprehensive planning strategies and efficient licensing and permitting programmes. But perhaps the greater challenge lies in popularising heat pumps in homes. High upfront costs deter homeowners from investing in the technology despite its long-term efficiency benefits.

“People aren’t willing to replace their heating device unless it’s broken, and when it is, they go for the cheapest and easiest option, which is still often fossil fuels,” says Beauvais. “This reluctance on the consumer side has scared policymakers.”

To overcome that barrier, governments will need to create financial incentives to offset initial expenses, with supportive policies at local and national levels.

“You can’t pass laws telling people what to do in their own homes unless you offer them an incentive, such as direct subsidies, and reduce the price of electricity compared to fossil fuels,” says Rosenow. “You need to create an environment where people actually save money by switching to heat pumps.”

There may already be greater demand for the technology than appears at first glance. Although heat pump sales dropped in parts of Europe in 2023,³ this data doesn’t tell the whole story; the overall heat market was in decline, and heat pumps actually increased their market share relative to fossil fuel heating systems. This suggests there is growing interest in heat pumps, and that they are becoming an increasingly common option for heating and cooling new buildings.

An electrifying future for smart cities

Policy is beginning to hasten that transition. In Europe, the "Fit for 55" package of legislation, aimed to deliver on the bloc’s 2030 climate targets, includes a directive to increase energy efficiency by 11.7 per cent by the end of this decade. Every city with more than 45,000 citizens will be required to create a heating and cooling plan under this Energy Efficiency Directive. That planning process is an opportunity for cities to rethink their energy systems and identify local resources, like a warehouse generating heat waste, that can be leveraged to decarbonise heating and cooling. The city of Ghent in Belgium found that a soap factory near the city centre emitted valuable amounts of waste heat through its wastewater, and have recovered this heat to power a nearby district.

“The heating and cooling plan analysis process will unlock insights for many cities about where they can generate energy efficiency gains,” says Beauvais. “But since cities have limited power and budgets, it’s always better to have a national framework that provides additional incentives.”

To this end, the European plan also includes a Social Climate Fund which supports households and businesses as they switch towards renewable energy in their buildings, in line with national climate plans. France has developed a national Renewable Heat Fund to help cities and local authorities finance their district heating projects.

In countries that have had clean energy incentives in place for longer, such as Finland, heat pumps and district heating are prevalent in new buildings. “It’s fairly easy to make it mandatory in new buildings,” says Rosenow. “When it comes to updating older buildings, you need to announce a plan well in advance, communicate with the people responsible for implementing it, and offer financial support and exemptions when necessary.”

Even in the United States, where there is no similar national plan, New York has one of the world’s largest district heating networks, and heat pump sales outpaced those of gas boilers for the first time in 2022, signalling a slow but accelerating cultural change.

Companies are taking notice, too. While the heat pump market was traditionally dominated by smaller players, larger companies such as Octopus in the UK are offering discounts on heat pumps. A German heating installer, Thermondo, has developed a rental option on heat pumps, for people who are looking to replace their boilers but are discouraged by the cost.

“Costs still need to come down in some of the less mature markets, but there’s a lot of momentum when it comes to innovation, the consumer journey, and efficiency, and this likely means cost reductions are on the horizon,” argues Rosenow.